Foreign Ownership Indonesian Property; Is it Possible?
Without giving details about the time frame, Indonesian Finance Minister Bambang Brodjonegoro said that the government will soon allow foreigners to own luxurious apartments in Indonesia. This move would be the government’s latest move to boost the slowing economy. Currently, private foreign individuals cannot purchase property or own land in Indonesia. This prohibition has been in place for many years as Indonesian authorities were concerned that foreign ownership of Indonesian property and land would surge significantly.
However, there already are several ways to avoid this prohibition. The simplest way is to purchase Indonesian property or land using the name of an Indonesian resident (for example a spouse, family-member, friend, etc.). Obviously, this strategy implies serious risks as you need to be 100 percent sure that the local resident is reliable (there have been many cases where foreigners were fooled or left empty-handed when the relationship with the local resident turned bad). In short, the position of the foreigner is very weak in this case.
Another way for a foreign citizen to buy property in Indonesia is by using the name of a company. The foreigner can set up a foreign investment company (PT Penanaman Modal Asing, or abbreviated PT PMA) and purchase the Indonesian property using the name of the company.
The third way for a foreigner to purchase Indonesian property is by using the name of the property developer through a “binding sale and purchase agreement”. This strategy is often used if the foreigner only stays a relatively short period in Indonesia (for example three to five years). After an Indonesian property developer has established a new apartment complex, the new apartments are still under the developer’s name. In this case, the foreign buyer can purchase the apartment from the developer while still using the developer’s name in the certificate (basically you buy ‘the right to own’). This strategy is often used for luxurious new apartment complexes in Jakarta. However, the Indonesian developer can only hold the certificate for a maximum period of five years. As such, if the foreigner wants to continue owning the property after this period, he or she needs to establish a PT PMA (as the PT PMA can own the property), or needs to sell the apartment to an Indonesian citizen or company.
Lastly, foreign citizens can buy Indonesian property if the property’s title of ownership is “the right to use” or “long term lease”. This can go up to 50 years and can be extended.